Avocado supplies need to ramp up

If orderly marketing of avocado volume in the United States is the goal for the next year, shipments from Mexico to the United States need to increase significantly — and soon.

Rob Wedin, vice president of fresh sales and marketing for Calavo Growers Inc. in Santa Paula, CA, said a review of the numbers show that the United States consumed about 480 million pounds of fruit during the third quarter of 2017 (July through September), which equates to an average of about 37 million pounds per week. That less-than-usual volume hit a low-water mark for the week ending Sept. 3, when only 25 million pounds were sold in the United States. Since then, total U.S. volume has been averaging around 37 million pounds per week.Rob Wedin, vice president of fresh sales for Calavo Growers, said that the industry needs to sell about 582 million pounds for the fourth quarter — or about 100 million more pounds than the third quarter.

“For the fourth quarter, we need to sell 582 million pounds — about 100 million more than the third quarter,” said Wedin, speaking of the industry at large.

For that to occur, average weekly shipments need to be around 45 million pounds. The first full week of October featured about 36 million pounds (combining shipments from Mexico and Chile), so the industry has its work cut out for it.

Wedin believes that the 582 million-pound figure can be reached, but he said that won’t happen without promotion. He noted that the f.o.b. price on conventional fruit had fallen to create some space for promotion, but a further correction is necessary.

As of Oct. 10, larger fruit (40s and larger) was still in short supply and commanding a market price in the $45-50 range. The 48s and smaller fruit (60-70 size) were selling for $35 to $40 per carton, while mini avocados (mostly 84s) were in the low $30s. Wedin said that pricing level does allow for promotion, which is what is needed to stimulate movement once again.

Gahl Crane, sales director for Eco Farms Avocados Inc. in Temecula, CA, said that while early October has seen a drop in the f.o.b. price, it has not yet been accompanied by a corresponding increase in shipments.

“For the past three weeks, Mexico has only sent about 31 million pounds each week to the United States,” he said Oct. 10, “but that should start to change. We are anticipating more volume from the middle of October through November.”

Crane added, however, that the extra-large fruit (40s and larger) looks like it is going to continue to be tight. “Sizing [from Mexico] is heavy on the 48s to 60s to 70s,” he said.

The avocado market has been in a demand-exceeds-supply situation for the past 12 months. A year ago, prices were at what seemed to be a high-water as the PMA Fresh Summit convention kicked off in Orlando, FL. But since then, prices have eclipsed that level several times with wholesale prices climbing above $100 per carton occasionally for organic avocados. For many weeks in this past year, the price for conventional fruit was above $60 per carton.

Bob Lucy, president of Del Rey Avocado Co. in Fallbrook, CA, said the lower prices are a welcome sight and should definitely lead to some good promotions. Doing the math, he noted that an f.o.b. price of around $35 per carton gives retailers plenty of wiggle room to put attractive pricing on their displays. Lucy agreed that volume should continue to increase in the coming weeks.

Mexico’s projected volume for its 2017-18 crop is above 2 billion pounds, with about 1.75 billion pounds expected to be shipped to the United States. California is expecting to double its volume to around 400 million pounds, and Peru, which sent more than 150 million pounds to the United States this year, could do the same next year. Chile is currently sending about 5 million to 8 million pounds per week, meaning its total U.S. shipments could be in the 70 million-pound range.

Add all those numbers together and the result is a total U.S. number from Oct. 1, 2017 to Sept. 30, 2018 of about 2.38 billion pounds — or 45 million pounds per week on average for the entire year.